Is customer centricity the right goal?
Provocative as this may seem, there may be a fundamental flaw in the tenacious pursuit of customer centricity by financial institutions.
During a recent visit to San Francisco, I met up with several innovative start-ups and some of our favourite customer role models – Amazon and Facebook – and although their connection to the customer is paramount, they don’t talk about “client centricity”. But they do talk about “customer outcomes” and they thrive on delivering them.
The idea is less about centricity and more about connectivity to the customer.
It seems that functional silos are to blame and they still are one of the greatest barriers to delivering successful outcomes for a customer. Despite many functions pointing to their net promoter scores (NPS) as testament to client centricity, the overall outcome for the customer is often wanting.
Within banking there is no question about the significant pace of disruption across all parts of the market. Internationally, The Lending Club and Mint and locally, the startup activity of both Society One and Moula are all examples of delivering an outcome to the small business customer that today’s banking sector does not serve.
What does customer connectivity look like?
As I reflect on my San Francisco visit, listening over five days to organisations that were driving new and innovative offerings to market, there were three traits I would define as creating a truly customer-connected organisation:
1. Customer outcomes drive the organisation
Across each of these organisations the words “sales, revenue, margin and cost” are replaced with “usage, # orders per minute and return on feature”. Goals are defined in terms of the customer and the engagement of the customer with the organisation’s offerings are measured religiously and by all levels of the organisation. Products are not sacrosanct – where there is little indication of customer engagement, products are readily refined, turned off, dismantled and rebuilt. Customer experience is monitored and changes are made daily, with A/B testing a natural course of business.
The organisation is focused first and foremost on the customer outcome. Amazon, for example, measures every aspect of what it is delivering to the customer, breaking it down to a level of simplicity with each individual and team having a clear understanding of “the three customer outcomes we are accountable for”.
This mentality and the measures that come with it keeps the organisation’s performance connected to delivering the right customer outcome. And product, sales, marketing and service teams adapt and fine-tune every step of improvement on engaging the customer – not as an NPS score, but as a measure connected to the customer in real or near real time.
2. Decisions are pushed to the edge of the organisation and to where the customer resides
The “two pizza team” is a well-known ethos of the Amazon structure. These teams have accountability and the responsibility to deliver customer outcomes at the edge of the organisation. Invariably this means they need autonomy to make the right decisions, connecting to customer trends and driven by “time to market” to address them. They can “change a feature on the website” right at the interface of the customer interaction and then change tack on the management plans that have been submitted. Accountability for the rationale behind the change is expected, but the time to change is not interfered with. For the customers, this means a sense of being understood, listened to and, as is often the case, being delighted by the organisation’s response to their needs. For the organisation, the ability to continuously adapt and keep its customers is a real and tangible benefit.
3. Data and innovation act as the connective tissue across the organisation and with the customer
Capability around data and the pursuit of innovation are truly embedded in the DNA of these organisations. Data is democratised and not “owned” by any part of the organisation. All individuals understand, interpret and use data to make decisions. Analytics is a respected skill across the organisation and the data scientist acts as a proactive innovator within the organisation to use insights into the customer, rather than being disconnected from the heart of the decisions. A simple piece of advice from a data scientist that we met with was “just let the data scientist participate in the executive meeting, let him or her listen to the types of decisions being made and bring you the opportunities to use analytics to improve them”.
The spirit of innovation is also wrapped up closely in data. It is clear that the closed loop between an analytical insight and the customer gives you the chance to have a meaningful conversation. One example was in the business to business domain where identifying a “change in the way our customers are using our products and services” quickly caused the product team to ask “why”.
A call went straight to the customer relationship manager who arranged a catch up with the customer – not to probe into a cross sell conversation, but to purely ask: “What has changed for your business that has led to a change in how you are engaging with our services and can we help?” Most impressive was the willingness to “adapt the contract to get a more cost effective outcome for the customer”. And then the all-important feedback loop that went straight back to the product team so it understood and could innovate and delive continuous improvement to the customer. In effect, the power of data and innovationbecomes the connective tissue, driven by a change in customer behaviour, to constantly improve and adapt as a team in market.
So how can banks adapt?
By taking the ethos of connectivity on board and starting to challenge in the spirit of “prove, test, learn and adapt”, the ability to truly address customer outcomes will start to take shape.
What are some practical steps to achieve this?
- Find a small part of the business at the edge, and practice the mantra.
- Move the decisions of the organisation as close to the customer as possible
- Keep small, nimble teams accountable to the customer.
This article was first published in Asia-Pacific Banking & Finance.